Unaudited Consolidated Financial Statements in Singapore – What Businesses Need to Know
In Singapore’s business environment, many companies operate within a group structure—where a parent company controls one or more subsidiaries. To provide stakeholders with a clearer view of the overall financial health of the group, consolidated financial statements are often prepared. However, not all consolidated statements are subject to audit. This brings us to the concept of unaudited consolidated financial statements—a crucial but sometimes misunderstood aspect of corporate financial reporting in Singapore.
This article explains what unaudited consolidated financial statements are, when and why they are prepared, their uses, limitations, and how your business can benefit from expert support in compiling them—even in the absence of a statutory audit.
What Are Unaudited Consolidated Financial Statements?
Unaudited consolidated financial statements refer to group-level financial reports that combine the financials of a parent company and its subsidiaries without having gone through an independent audit process. These statements present the financial position, performance, and cash flows of the entire group as if it were a single economic entity.
They typically include:
- A consolidated statement of financial position
- A consolidated statement of profit or loss and other comprehensive income
- A consolidated statement of cash flows
- Notes to the consolidated financial statements
Unlike audited financial statements, these reports are not reviewed or certified by a licensed audit firm. Nevertheless, they must still adhere to the Singapore Financial Reporting Standards (SFRS) for consistency and accuracy.
When Are Unaudited Consolidated Financial Statements Used?
There are several situations where companies may prepare consolidated financial statements without requiring an audit. These include:
1. Group Exemption from Audit Requirements
If the parent and its subsidiaries fall within the small group exemption under the Singapore Companies Act, the group may not be required to submit audited consolidated statements, provided it satisfies at least two of the following:
- Total revenue of the group is not more than S$10 million
- Total assets of the group are not more than S$10 million
- Total employees across the group do not exceed 50
2. Internal Management Reporting
Management may prepare unaudited group financials for internal decision-making, budgeting, or strategic planning. This is common among family-owned businesses or investment holding companies.
3. For Due Diligence or Fundraising
Potential investors, lenders, or buyers may request unaudited consolidated statements as part of preliminary due diligence before a full audit is commissioned.
4. For Submission to Holding Companies or Overseas Shareholders
Subsidiaries of multinational corporations may be asked to prepare unaudited consolidated reports for submission to the group’s headquarters or external stakeholders in other jurisdictions.
Key Features of Unaudited Consolidated Financial Statements
While they share structural similarities with audited statements, unaudited reports have distinguishing features:
- No independent auditor’s opinion is attached
- Prepared internally or with the assistance of an external accountant, but not subject to a statutory audit
- May use management estimates more liberally
- Typically used for informational or internal purposes rather than statutory compliance
Despite lacking an audit opinion, unaudited consolidated financial statements should still maintain integrity, consistency, and adherence to accounting standards.
Why Businesses in Singapore Prepare Unaudited Consolidated Statements
Even without audit requirements, many businesses still opt to prepare consolidated statements for the following reasons:
✅ Clear Overview of Group Financial Health
They provide a snapshot of the group’s financial performance and position across entities, helping management and shareholders see the bigger picture.
✅ Improved Decision-Making
With consolidated data, business leaders can allocate resources more effectively, identify underperforming subsidiaries, and implement cross-entity strategies.
✅ Lender and Investor Readiness
Unaudited group reports often serve as the first step in funding discussions. Banks and private investors may require them to assess preliminary group performance before moving to formal due diligence.
✅ Regulatory and Tax Planning
Though unaudited, these statements can support tax planning, transfer pricing reviews, or regulatory compliance in industries like real estate, finance, and logistics.
Limitations of Unaudited Consolidated Financial Statements
While useful, unaudited reports come with certain limitations:
- Lower reliability compared to audited reports
- May not meet regulatory requirements in some situations (e.g. government grants, IPO, or listing preparation)
- Potential errors or bias if prepared without proper expertise or review
- Limited acceptance by certain banks or investors who require audited figures
Therefore, while unaudited financials can be helpful, businesses must ensure that they are prepared by qualified professionals who understand consolidation principles under SFRS.
How to Ensure Quality in Unaudited Consolidated Financial Statements
Even though an audit is not performed, businesses should still ensure their unaudited consolidated financial statements are:
- Accurate and complete: All subsidiaries and joint ventures must be properly included.
- Consistent with SFRS: Uniform accounting policies must be applied across the group.
- Free from material misstatements: Proper elimination of intercompany transactions and balances must be carried out.
- Reviewed by professionals: Engaging a professional accountant or audit-trained team ensures credibility and technical accuracy.
At https://www.auditservices.sg, our experienced team supports companies in preparing unaudited consolidated financial statements that meet professional standards. We ensure accuracy, proper presentation, and full compliance with the SFRS framework.
Common Industries Using Unaudited Consolidated Statements
Some industries are more likely to rely on unaudited consolidated reports due to the nature of their operations:
- Family-owned conglomerates
- Real estate developers and holding firms
- Construction groups with multiple SPVs
- Startups with multiple legal entities
- Logistics and distribution groups operating regionally
These businesses often find unaudited statements to be a cost-effective and timely solution before moving on to a formal audit process.
Why Work with AuditServices.sg?
While unaudited statements don’t require statutory auditing, professional preparation is still essential. At https://www.auditservices.sg, we help Singapore companies:
- Prepare accurate, SFRS-compliant unaudited consolidated reports
- Consolidate financial data across subsidiaries and joint ventures
- Eliminate intercompany transactions correctly
- Advise when audit or review might be required
- Transition to audited financial statements if needed later
Whether you need support for internal decision-making, investor briefings, or future audit readiness, we have the experience and technical know-how to deliver timely and reliable financial reporting.
Conclusion
Unaudited consolidated financial statements offer a practical and flexible way for Singapore companies to present group-level financials without undergoing a full statutory audit. While not suitable for every scenario, they are valuable tools for internal analysis, funding preparation, and strategic planning.
However, their usefulness depends heavily on the quality and accuracy of the preparation process. Engaging experienced professionals like those at https://www.auditservices.sg ensures that your statements reflect the true financial standing of your group—setting the foundation for confident decision-making and future growth.